set, and then depreciating it, users are able to reliably see the direct effect it has on the financial position of the firm. Using the method outlined will ensure greater reliability and the most relevant information for the users and ultimately benefits all parties involved in the financial reporting process. Another benefit is that verification of the information will be visibly identified.
             The company's goal is to simply minimize the negative impact of events on the Financial Statements so that there will not be a tremendous impact on user decision and stock prices because executive compensation package are heavily weighted with stock options. This motivates management to stay on their toes because their alternative motive will be to boost share prices.
             Corporations have to be conscious of their financial statements because it must be viewed by investors, creditors, and other potential prospectors, in order to secure additional capital at low cost and avoid class action suits by shareholders. On one hand, auditors must ensure that accounting information meets the disclosure needs of the public to prevent any lawsuits. This usually happens when the user of the information believes that an auditor deliberity allows a company to get away with inconsistencies in their financial statement, or have misrepresented the true financial position of the company. Currently, the primary means of punishing negligent acts is through litigation; therefore, one can reasonably assume the threat of a lawsuit causes firms to demonstrate a greater level of care when completing an audit. Auditors are forced to represent the best interests to their own firm and their existing clients. This constant re-evaluation also helps to ensure the nature and value of the information reported by the firm is not biased. In general, managers are less likely to make an attempt at distorting a section of the financial statement if they know ...